To build a championship team, health systems should draft the right players and support them
Health Care Current | January 23, 2018
This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory, and legislative changes.
To build a championship team, health systems should draft the right players and support them
By Steve Burrill, Vice Chairman, US Health Care Providers Leader, Deloitte LLP
The University of Alabama football team has won a dozen national titles since 1936.1 Teams generally don’t win championships just because they have better players or luck, although that certainly helps. The most successful teams usually have something more. They have a well-crafted but flexible playbook that players and coaches follow to the letter. That playbook—combined with great coaching and faith in a freshman quarterback and other less experienced players—allowed the Crimson Tide to come from behind and win this month’s national title game with a stunning touchdown pass in overtime.
I see many similarities between championship football teams and well-functioning health systems. The most successful health systems have their own version of a playbook. The strategies they follow when expanding their rosters with new physicians and team members help them build a winning combination.
Six principles for building a winning team
The independent physician office is becoming a rarity as small practices consolidate or join health systems. More than half of all physicians are now employed by a health system or hospital, and between one-third and two-thirds of independent practices are expected to consolidate within the next three years, according to Deloitte’s 2016 Survey of US Physicians. Shrinking revenues, challenging regulatory requirements, and the emergence of complex value-based contracts are driving much of this trend.
To gain insight into how health systems and medical groups work with their physicians, the Deloitte Center for Health Solutions interviewed 28 executives from health systems and large physician groups. Our respondents agreed that to succeed in a value-based environment, health systems and physicians should align their strategies for delivering superior outcomes, reducing costs, and helping ensure positive patient experiences.
The following six strategies can serve as the framework for a successful health system playbook:
- Know your partners: To ensure that mutual goals can be achieved, it is important that physicians and health systems evaluate each other before entering into any sort of business arrangement. Due diligence should go beyond background and credentialing checks on physicians. Figuring out whether a potential partner will be a cultural fit—through interviews with physicians and their staff—is another step to consider. Health system executives should also recognize how work preferences can vary by age and gender. Older physicians, for example, might want their own office, while younger ones are more willing to share space. The health system also should outline its expectations so that both sides understand what is expected and what can be gained through the relationship.
- Put the physicians in charge: Health system executives warn that it can be a mistake to treat physicians as employees or contractors. They should feel that they are equal partners in the relationship with a voice and the ability to make decisions. Open communication and engagement between the health system and its physicians is critical. Some health systems use town-hall and department meetings to help engage physicians. The president of a health system-affiliated provider network told us, “If you don’t have the foresight to bring in these docs and give them a voice, and anticipate that they will see things differently, then you’re missing part of the puzzle.”
- Support data-driven decisions: While most health systems are migrating to a value-based delivery system, medical groups and physicians might not have access to essential information. Arming physicians with data can help them develop a strategy to improve care quality and cost. Health systems also should emphasize the importance of clinical documentation. Our study respondents agree that physicians tend to be receptive to training and coaching on clinical documentation—particularly if the potential impact on patient care and payment are emphasized.
- Make it worth their while: Just about every executive we interviewed said that incentives are critical for getting physicians to support value-based initiatives. Aligning incentives is important regardless of specialty and whether the physician is directly employed or affiliated with the health system. As the health care industry transitions away from a fee-for-service reimbursement model, compensation models and bonus structures should change, too. Establishing agreed-upon metrics that define success can be essential for new bonus structures to work.
- Be transparent: Data can be a powerful tool when trying to influence physician behavior. Peer-to-peer comparisons, for example, can push physicians to improve by playing to their natural desire to excel. Performance metrics should appeal to a physician’s intellect and pride by spelling out financial and/or operational impacts on the organization or department in terms of revenue, cost savings, denied claims, or performance on quality measures.
- Provide the tools for success: Health system leaders should work with their physicians to design new workflows that keep pace with population health and evolving care models. Some health systems offer practice management services to help their partner physician practices operate their businesses more efficiently. A health system might also support partner physicians by giving them access to additional staff or technology resources. Some executives told us they help independent physicians meet government reporting requirements.
Health systems and the physicians on their team should share the same goals: produce superior outcomes, reduce costs, and ensure positive patient experiences. Most of the executives we interviewed agreed that if you show the same data to an administrator and a physician, they’ll come to the same conclusion about what is needed to improve.
As Alabama’s legendary football coach Paul “Bear” Bryant advised, “Set goals, high goals, for you and your organization. When your organization has a goal to shoot for, you create teamwork—people working for a common good.”2
Like football teams, health systems should build a playbook that outlines how to partner with physicians. For health systems to compete successfully and excel under value-based care models, individual commitment from all players—from veteran executives to recently recruited physicians—can be essential for building a championship team.
2Don’t Play for the Tie, Bear Bryant on Life
In the news
Federal government shuts down for three days, CHIP funding authorized for six years
The federal government officially shut down on January 21, after the Senate did not pass the short-term spending measure advanced by the House of Representatives earlier last week. However, on Monday, January 22, Congress reached an agreement and passed a bill to fund the federal government through February 8, 2018 and extend Children’s Health Insurance Program (CHIP) funding for six years. The bill also delays the Affordable Care Act’s medical device tax and the so called “Cadillac tax” on generous employer plans for two years as well as the health insurance tax for one year.
Funding for CHIP, which provides health insurance for roughly nine million low income children, expired on October 1, 2017. Congress passed a short-term extension of CHIP as part of the December 21, 2017 continuing resolution. The extension was designed to give states enough funding to continue their programs until Congress could pass longer-term legislation; however the Centers for Medicare and Medicaid Services (CMS) had warned that some states would have run out of money sooner.
FDA pilot to share more information with public about some new drugs
On January 16, the US Food and Drug Administration (FDA) launched a pilot program to release clinical trial summaries for recently-approved drugs. The FDA will post certain parts of clinical study reports (CSRs)—including the protocol, amendments, and statistical analysis—in its online drug approval database, Drugs@FDA. The program will include up to nine drugs, which treat a range of diseases, all volunteered by their manufacturers.
When a drug manufacturer submits a product for approval, it includes a CSR in the application. A CSR details a drug’s efficacy and safety information, as demonstrated in its clinical trial.
This initiative was originally outlined in the winter 2017 edition of The Journal of Law, Medicine, & Ethics. Existing practice has been for the FDA, after approving a drug, to release a summary of the data, proposed labeling, and “other important, relevant data.”
FDA says it will continue working to improve transparency for providers, researchers, and the public. To improve access to clinical trial information, FDA will soon begin including drugs’ clinical trial identifier numbers in its materials as well. Once the pilot is complete, the FDA will seek public comments on it.
Related: FDA Commissioner Scott Gottlieb reiterated his commitment to innovation and streamlining the medical device review process last Tuesday. His statement followed the release of a Government Accountability Office (GAO) report urging FDA to use the “least burdensome” approach possible consistently when evaluating devices. He said that as part of the agency’s commitment to using this approach, the FDA implemented a program to provide device sponsors with more efficient and accurate ways to measure the benefits and risks of devices early in the development process.
Utah, Vermont aim to lower drug prices by importing them from Canada
Aiming to lower prescription drug prices, state legislators in two states have introduced legislation that would allow drug importation from Canada. Both bills target drugs that would likely provide the largest savings to residents.
The bill proposed in Utah would allow wholesale importation of certain drugs already approved for sale in Canada. It would direct the state’s Department of Health to design an importation plan and then apply for approval from the US Department of Health and Human Services (HHS).
The bill proposed in Vermont also would create an importation plan and would require drug manufacturers to give notice if they intend to raise drug prices. The bill would also require health plans to provide information about how a drug’s price affects premiums in the state. The Green Mountain Care Board—which oversees changes to Vermont’s health care system—would publish an annual report on premium changes.
Congressional panels explore government role in preventing opioid abuse
Last week, both the House Ways and Means Committee and the Senate Committee on Homeland Security and Government Affairs held hearings to discuss ways the government could help prevent opioid abuse.
The Ways and Means Committee heard testimony from the HHS Office of Inspector General (OIG), the Government Accountability Office (GAO), and CMS. The Deputy Inspector General for Investigations, Gary Cantrell, reported findings from a data brief released by the OIG’s office. He said that in 2016:
- One in three Medicare Part D beneficiaries received an opioid prescription
- Nearly 500,000 Medicare beneficiaries received high doses of opioids (defined as more than 120 milligrams of a morphine equivalent dose (MED) for three months)
- 90,000 patients were at risk of opioid abuse
- 22,000 patients were actively “doctor shopping”
Witnesses from the OIG, GAO, and CMS presented a number of possible ways to help address opioid abuse. They said that CMS could:
- Provide prescribers with additional education and tools on opioid abuse
- Ensure prescribers use prescription drug monitoring databases
- Expand structured reviews of drug utilization by plans to include opioids
- Require Medicare Part D plan sponsors to notify CMS when they detect fraud
- Require Part D plan sponsors to submit written strategies on combatting the opioid epidemic to CMS
- Improve the accuracy of Medicare and Medicaid claims data
The Senate Committee on Homeland Security and Government Affairs held a hearing to discuss how Medicaid expansion under the ACA could have contributed to more individuals having access to, and abusing, opioids. The hearing largely fell along party lines with Republicans stressing the unintended consequences of Medicaid expansion, and Democrats emphasizing that more individuals can access treatment for substance abuse disorders under Medicaid expansion.
Related: HHS OIG recommended changes for Medicare Advantage data
In a report issued this month, HHS OIG made seven recommendations to CMS to improve the accuracy of encounter data. In theory, encounter data may help CMS with payment accuracy and allow the agency to monitor patterns of care for Medicare Advantage enrollees. The OIG recommended that CMS request more detail and scrutiny for accuracy of claims. CMS disagreed with recommendations on tracking responses to edits, ensuring the clinician giving the service is identified, including referring provider, citing increased administrative burden for CMS and health plans. However, they agreed with the remaining recommendations.
Individual market appears to be stabilizing in Minnesota but premiums higher
Enrollment is down, premiums are up, and health plans are performing better in Minnesota’s individual market, according to an evaluation by the state’s Department of Health (MDH) released this month.
Premiums have increased over time, rising from $231 per member per month in 2012, to $517 in 2017. The largest one-year increase occurred between 2016 and 2017, when the average per-member premium rose by nearly 40 percent. Reinsurance shielded some Minnesotans from these price hikes. Nevertheless, individual market enrollment has decreased. It peaked in 2015, with 309,000 Minnesotans signing up for coverage directly, through a broker, or MNSure, the state’s exchange. In 2017, that number dropped by nearly half, to only 166,000. The authors expressed concern that more healthy individuals could still leave the risk pool, destabilizing the market further in the future.
MDH also examined the financial performance of health plans. The medical loss ratio (MLR) for all of the state’s individual market insurers exceeded 100 percent in 2014 and 2015, which indicates they did not collect enough in premiums to cover expenses. However, in 2016 and 2017, the MLR was below 100 percent, indicating that insurers priced premiums to more accurately reflect market risk and service utilization. The MLR was also below 100 percent in 2012 and 2013, before the ACA’s full implementation.
For all analyses, the report used data from the second quarter of each year between 2012 and 2017.
Related: Recent research from the Robert Wood Johnson Foundation found that the insurance landscape for farm workers is unique and complex. Although farmers tend to be older and have income above the national average, 14 percent are uninsured, which is more than two percentage points higher than the national uninsured rate. Nationwide, 17 percent of farmers purchased health insurance in the individual market, though that proportion varies widely by state.
(Sources: “Evaluating the stability of Minnesota’s individual insurance market,” Minnesota Department of Health, January 2018; “Marketplace pulse: Mixed harvest,” Robert Wood Johnson Foundation, January 2018)
Senate Finance Committee sends Azar nomination to the floor
On January 17, the Senate Finance Committee voted to approve Alex Azar, the administration’s nominee to lead the HHS (see the January 16, 2017 Health Care Current). The nomination now moves to the Senate floor for a full vote. Most Democrats on the committee voted against his nomination because while he was president of Eli Lilly Company, it significantly raised drug prices. HHS has been without a Secretary since Tom Price resigned in September.
Proposed legislation seeks to modernize OTC Drug Review framework
On January 17, the House Energy and Commerce Subcommittee on Health held a markup session of three bills, including new legislation that would establish an over-the-counter (OTC) monograph user-fee program at the FDA. The proposed legislation would modernize the existing OTC Drug Review framework, which was established in 1972. That framework creates monographs that serve as guidelines for acceptable ingredients, uses, doses, formulations, labeling, and testing.
The Over-the-Counter Monograph Safety, Innovation, and Reform Act would allow for faster safety-label changes and would create a pathway for innovations. The bill would authorize a new user-fee program to fund the FDA’s review of ingredient efficacy and safety in OTC drugs. The proposal has bipartisan support and received positive recognition from a number of organizations including the American Academy of Pediatrics and the American Public Health Association.
Health care highlights from CES
Each January, about 100,000 innovators from around the world descend on Las Vegas for the Consumer Electronics Show (CES) where they preview the latest innovations. Here is a look at some of the health care products that were on display:
- Prevent Biometrics, Inc. displayed a connected mouth guard that can detect potential concussion-causing impacts. The device can measure linear and rotational acceleration, impact location and direction, and it keeps count of every impact. The device displays the data in real time through an app.
- Cardiomo Care, Inc. has a digital heart monitor that is secured to a patient’s chest without cords, using adhesive patches commonly found at a hospital. The device allows patients to discretely wear a monitor, which collects data about their hearts. The device uses an algorithm to detect heart abnormalities and provides tips to help prevent heart problems. Omron Corporation showcased its HeartGuide smartwatch with blood pressure-monitoring ability. The watch captures manual readings with the press of a button, but it can also take readings during sleep. Data can be shared directly with the care team through a mobile app.
- Cosmetic company L'Oreal Cosmetics Company debuted its UV Sense device, a battery-free wearable that measures ultra-violet light exposure from the sun. The tiny electronic sensor fits on a fingernail or a pair of sunglasses, and is reusable and re-adhesive. It works with an app that syncs data and alerts users when they should cover up, get out of the sun, or take more precautions.
- Xenoma Inc.’s smart shirt monitors breathing, motion, pressure, body temperature and other functions. It is machine washable, non-bulky, and designed for comfort. The company is also working on clothing for dementia patients. Rather than confining patients to a hospital or keeping them under observation, the “smart pajamas” would monitor their movements. Health care startup Siren Care also showcased its smart socks for patients with diabetes. The socks can detect foot injuries, which are common among diabetics, and transmit the information via a smartphone app, text message, or phone call.
- SmartSleep, a newly launched sleep-enhancement product from Philips, comes as a wearable headband and connects to a mobile app. When the device detects deep sleep, the headband’s speakers start playing white noise in a slowly repeating pattern, aiming to reinforce a good night’s sleep.
- UnitedHealth Group revealed a new initiative for its Medicare Advantage population. Members with diabetes can access a virtual nerve center that collects data from various sources, including wearables, and allows health navigators to help members access programs and services that can help them manage their condition.
Analysis: Deloitte’s report, Top 10 health care innovations, features innovations that have the potential to help the health care industry achieve more for less—defined as more value, better outcomes, greater convenience, better access, and simplicity; all for less cost, complexity, and time required by the patient and the provider—in a way that expands what is currently possible.
Innovators face many obstacles in digital health, remote monitoring, and smart technologies. The technology not only has to be useful, but it must be easy for a consumer to use. Even if consumers like the devices, long-term use could depend on whether physicians find them useful and actionable. Getting health plans or government payers to see the value of new devices, and agree to pay for them, is another hurdle.
The health care presence at CES this year demonstrates that these challenges are not deterring traditional health care companies or non-traditional entrants from innovating and developing new products, especially in the areas of wellness and chronic-care management.